Yahoo! Finance Takes A Look At The Current Arcade Trends

arcadehero March 24, 2015 0
Yahoo! Finance Takes A Look At The Current Arcade Trends

Here is an article that has been making the rounds since yesterday – I would tip the hat to one person but it has been sent to me from multiple sources so I thank all of you. ūüôā

Arcades in a chase to recapture gamers

As for my initial reaction, it was good to read another mainstream article that wasn’t completely dismissive of arcades as some dead industry that is magically reappearing from nothing. As I have explained many times on here, as well as mentioned in my book, the industry had a downturn back around 2001-2004 but even then, there were still many locations and manufacturers that stayed in business. They do point out that the number of locations has dramatically changed from 1982 They also touch on the social aspects of arcades which¬†are one of our best aspects of entertainment.

The writer talked to a few arcade business owners РVic Parise of Nanuet Arcade, David Bishop of the new Level 257 that has been in the news everywhere this month, and Paul Kermizian of Barcade. They also get a quote from Nolan Bushnell of Atari fame, and Jack Guarnieri of Jersey Jack Pinball.

Just a few of things I found to be misunderstood out there as this article is being talked about on arcade forums and social media.

The article touches on the growth of FECs but apart from mentioning Level 257, doesn’t really cover how FECs are driving industry trends as opposed to the classic or bar/arcade growth. It also does not cover how bars really have been an integral part of the industry since Nolan Bushnell and co. placed Pong into Andy Capp’s Bar back in the early 70s. More than anything, bars have just rediscovered the benefits of having video entertainment on hand while big money entertainment has been growing quite a bit for the past few years.

It is true that I think there is a worry as to how long the trend of classic bar/arcades will maintain the steam. On that I agree tha On game consoles the remake fever of the 00s seems to have passed to a great degree as we don’t really see those coming along with the same frequency. I think that for the most part, current manufacturers have been fairly poor about taking advantage of that as they don’t see the same amount money it in that they do from the FEC scene. We’ve had Pac-Man Battle Royale, Pac-Man Chomp Mania, Sea Wolf The Next Mission and that is about it.¬†Is it too late to jump on the bandwagon? I don’t think so.

I’m not calling for all new releases to be classic remakes or anything. But with most new video releases over the past six months, their price tag average is $10,000+ which is not something that most bar/arcades are going to be chomping at the bit for. I think that low-end market is being ignored almost completely and that is a major factor that can damage how well they do. Like it or not, most classics make next to nothing on a pay-to-play model. The new stuff is what brings the cash and interest in.

I am surprised that the article does not acknowledge any games designed with the bar in mind – the aforementioned Pac-Man Battle Royale (replete with cup holders, in case it wasn’t obvious enough!); Golden Tee; Big Buck; or Virtua Tennis 4. All of those, especially the Golden Tee or Big Buck series have driven play at bars for a long time.

This line is getting some attention:

The games are more of a way to get people in the door: They generate just 10% of revenue, while craft beer is the moneymaker, Mr. Kermizian said.

What I think should be noted is that 10% certainly doesn’t apply to everyone. There are so many different models for putting together an arcade now that you should not take that number to apply to everyone. I can’t speak for anyone else in my class as very few share earnings but for my arcade, I have no food, no beer or bowling or laser tag, etc. The games, 95% of which are video, make 100% of my revenues – and I am coming up on my 7th year in business.

Among the few companies to make their revenues public, Dave & Busters often shows that there is close to a 50/50 split between the food and the games. That will¬†fluctuate¬†of course but it is interesting how often the games come out on top since their business model promotes places such a strong emphasis on playing the games. Also just because they tend to focus on brand new games and have huge budgets doesn’t make them any less legitimate as an arcade business as my mom-and-pop style place.

Finally, I think when these writers look to find out about the industry, they should explore the pool of manufacturers a bit deeper. I don’t think anything better indicates that there is a growing industry than looking at the manufacturers who make the products that site operators need to thrive. Take for example at the IAAPA 2014 Exhibitors list. They have 1004 companies exhibit at the show last year. No, not all are specific to coin-op gaming but there are more than just a few to choose from.

What are your thoughts on the Yahoo! article?


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